1. Marketing Channel Strategy
Channels of Distribution Management
Marketing Channel Strategy
Dr. Bert Rosenbloom Professor of Marketing and
Rauth Chair in Electronic Marketing

2. Channel Strategy
The broad principles by which the firm expects to achieve its distribution objectives for its target market(s)

3. Six Fundamental Strategic Distribution Decisions
What role should distribution play in the firm’s overall objectives and strategies?
What role should distribution play in the marketing mix?
How should the firm’s marketing channels be designed to achieve its distribution objectives?

4. Six Fundamental Strategic Distribution Decisions (Cont’d)
What kinds of channel members should be selected to meet the firm’s distribution objectives?
How can the marketing channel be managed to implement the firm’s channel design effectively and efficiently?
How can channel member performance be evaluated?

5. Channel Design
Those decisions involving the development of new marketing channels where none had existed before, or the modification of existing channels

6. Channel Design and Differential Advantage
The design of the channel should contribute to the firm’s quest for Differential Advantage

7. Paradigm of the Channel Design Decision
Recognize need for channel design decision
Set and coordinate distribution objectives
Specify distribution tasks
Develop possible alternative channel structures
Evaluate variables affecting channel structure
Choose the best channel structure
Select the channel members

8. Channel Design Decision Recognize Need for Channel Design Decision
Phase 1:
Recognize Need for Channel Design Decision
Obvious examples pp in text
But many times the need to make channel design decisions is not obvious

9. Channel Design Decision
Phase 2:
Set & Coordinate Distribution Objectives
Become familiar with objectives of firm
Set explicit distribution objectives
Check for congruency

10. Specifying Distribution Tasks
Channel Design Decision
Phase 3:
Specifying Distribution Tasks
Don’t underestimate all of the “nuts and bolts” necessary to make products and services conveniently available to customers

11. Channel Design Decision
Phase 4:
Develop Alternative Channel Structures
Number of levels
Intensity at various levels
Types of intermediaries

12. Channel Design Decision
Phase 5:
Evaluate Variables Affecting channel Structure
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables
Heuristics play an important role

13. Choosing the “Best” Channel Structure
Channel Design Decision
Phase 6:
Choosing the “Best” Channel Structure
Product-based models (Aspinwall)
Financial Approach
Transaction Cost Analysis Approach
Management Science Approach
Judgmental –Heuristic Approach

14. Select the Channel Members
Channel Design Decision
Phase 7:
Select the Channel Members
Finding perspective channel members
Applying selection criteria
Securing perspective channel members

15. Target Markets and Channel Design Strategy
Work “backwards” from what the final customers wants. A “bottom up” approach.

16. Framework for Market Analysis
Market geography
Market size
Market density
Market behavior
when customers buy
where customers buy
how customers buy
who buys

17. Who Buys? Who makes physical purchase? Who uses the product?
Who influences the buying decision?

18. Channel Management
The administration of existing channels to secure the cooperation of channel members in achieving the firm’s distribution objectives

19. Motivating Channel Members
Find out needs and problems
Offer support consistent with channel member needs
Provide leadership

20. Learning About Channel Members Needs and Problems
“Grapevine” (informal communications network)
Inside research
Outside research
Marketing channel audit
Distributor advisory councils

21. Support for Channel Members
Cooperative approach
Partnership approach
Distribution programming approach

22. Product Issues in Channel Management
New Product Planning and Development
Product Life Cycle
Strategic Product Management

23. New Product Planning and Development
Channel member input
Acceptability
Fit with channel member assortments
Education and training
Problems?

24. What are the channel management implications during each stage?
Product Life Cycle
What are the channel management implications during each stage?
Introduction
Growth
Maturity
Saturation
Absolute decline

25. Strategic Product Management
Product differentiation
Product positioning
Product line expansion and contraction
Trading up and trading down
Brand strategy
Service strategy

26. Pricing in Channel Management
Cost
Market
Competition
Channels

27. Promotion Through the Channel
Vs.
Pull versus Push Promotional Strategy

28. Classic Push Promotional Strategies
Cooperative advertising
Promotional allowances
Displays and selling aids
In-store promotions
Contests and incentives
Special promotional deals and merchandise campaigns

29. “Kinder and Gentler” Push Promotional Strategies
Training
Quotas
Missionary selling
Trade shows